IMF Predicts Deceleration of Mexican Economy
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IMF Predicts Deceleration of Mexican Economy

Photo by:   Image by Wal_172619 / 2014 images from Pixabay
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Emilio Aristegui By Emilio Aristegui | Junior Journalist and Industry Analyst - Wed, 04/27/2022 - 11:26

The International Monetary Fund (IMF) projected that Latin American economies will suffer a deceleration process throughout the next two years after Russia’s invasion of Ukraine caused global uncertainty regarding supply chains around the world.

“The war in Ukraine is convulsing the world economy and raising uncertainty about the prospects for Latin America and the Caribbean. Even before the war, the region's post-pandemic recovery was already running out of steam, and in 2022 growth is back to the pre-pandemic trend rate of around 2.5 percent,” reads IMF’s Economic Outlook for the Americas, April 2022 Report.

Mexico’s growth projections were set at an annual 4.8 percent growth for 2021, as the newest report projects a 2.0 percent growth for 2022. However, the IMF expects a 2.5 percent increase in 2023.

The IMF explained that Russia’s invasion of Ukraine brought a new inflation shock for economies around the world. EU authorities have led the way with strict sanctions to Russia, but these monetary policies could affect food and energy prices on the most vulnerable populations in the region. Social tensions have also worried the leading economies, which are also seeking to contain the impact of the war around the world.

The war brings with it a new inflation shock, and the region's authorities have responded decisively with more restrictive monetary policies and measures to cushion the impact of rising food and energy prices on the most vulnerable. “Rising interest rates complicate the management of already high debt levels, and a resurgence of the war could further tighten financial conditions in the region. In this context, an inclusive consolidation strategy would preserve support for the most vulnerable while helping to replenish reserves,” reads the report.

The IMF had previously recognized Mexico’s proper debt management. Minister of Finance Rogelio Ramírez de la O reported during the G20 Ministers of Finance Meeting that the country was quick to raise interest rates in the face of inflation.

Photo by:   Image by Wal_172619 / 2014 images from Pixabay

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